Posted by genieSABRE on Sep 1, 2012
Home Price Dip In June

Home Price Dip In June

Canadian Real Estate Association Report:

Source: Hannif Highclass c/o Genie Sabre Realty Inc.
Publish:MY BLOG: Toronto Real Estate: June 16, 2011

Sales Activity And National Average Home Price Dip In June.

The Canadian Real Estate Association says there were fewer sales of previously owned homes last month, down 1.3 per cent from May and down 4.4 per cent from June 2011.

The national average home price in June was $369,339, down 0.8 per cent from the same month last year.

The real estate association says price gains remained strong in Toronto, accelerated in Calgary and continued slowing in Greater Vancouver.

The association also says the decline in sales activity and an increase in new listings resulted in a more balanced national housing market in June.

The association’s president, Wayne Moen, says Canada’s housing market lost a little altitude in June but it’s still flying pretty high.

 

 

David Madani, an economist with Capital Economics, says that the reason prices keep rising, despite fundamentals that indicate they should be moderating, is because a bubble mentality is driving the Canadian market. “It’s this belief that prices are going to continue to go up, which becomes a self-perpetuating force,” he says. He explains that in good times, rising prices create a sense of urgency among home buyers who don’t want to miss out on the chance to benefit from soaring prices. So people pile in, pushing prices higher. This creates the appearance that housing is an asset that can only rise in value, and even more pile in.

But this line of thinking can reverse, and people can overreact to a declining market too. The greed that previously drove buying behaviour turns into fear that prices will fall indefinitely. This can be a self-perpetuating force. The result is that prices can dip farther than where economic fundamentals suggest they should be.

 

When prices do start to fall, don’t expect a quick rebound like we saw three years ago. The average home price fell by 8.5% between August 2008 and March 2009, according to the Teranet-National Bank House Price Index, in a decline sparked by the financial crisis. By November, the market had already recovered. Part of the reason for the quick rebound was massive government intervention.

The Bank of Canada moved fast to slash interest rates to unprecedented lows, allowing banks to continue lending to businesses and consumers. The federal government also established a $125-billion program to buy mortgages it had already insured from banks and financial institutions, providing even more liquidity. The government ultimately bought mortgages worth a stunning $69.4 billion. The Bank of Canada has less room to manoeuvre today. The overnight rate is now 1% compared to 3% in August 2008. Cutting rates to stimulate the market is hardly an option this time. Banks have less flexibility, too. A five-year fixed rate mortgage is roughly 3.8% today, down from 5.7% in late 2008.

All of the scenarios thus far have discounted the possibility that the global economy actually starts to improve. But even if that happens, there will be consequences for the housing market. In a growing economy, the Bank of Canada will have to start raising rates to temper inflation, in effect shutting off the credit spigot that has allowed so many Canadians to buy homes. Sales activity will slow down, and prices will plateau. It could also provide the psychological shock that drives the market down even further.

That doesn’t mean that those considering buying a house today should necessarily let the prospect of a correction deter them. A house is firstly a place to live, not an investment. Bubbles occur, in part, because we forget that distinction. So buyers need to be comfortable knowing their houses might not increase in value over the next few years—and also that they could be worth much less.



 


REMEMBER: Real Estate

Home Owners: If, you already own a home – good for you!

May you be blessed with
warmth in your home,
love in your heart,
peace in your soul
and joy in your life.

However, if for any reasons you do intend to move due to upsizing, downsizing, moving to different town or ??? —
genieSABRE recommend you check out our main web site. You will not be disappointed!

Renters: New immigrant, 1st. Time Buyers Renters – its time to stop making your landlord rich.
genieSABRE FREE consultation, will help you & guide you through the whole process from finding the right home, to mortgage approvals, home inspection, lawyers etc Visit our main web, you will not be disappointed!

Real Estate Investors: Home ownership should be your 1st. priority. If you own your own home – Good for you. But now is the time to take that second step – Buying Rental Property for investment. Commercial, retail or home.
genieSABRE has extensive knowledge and experience in this field. As a developer of commercial /retail plazas (built 3 so far) and owners of residential rental homes, we can guide and advice you as to what is best for you according to your personal financial position.

Call: Hannif Highclass @ 416.444.4252

http://www.geniesabre.com

 

Play Video

Canada House Prices

 

Ready to Sell or Looking to Buy?

Call: Hannif Highclass @ 416-444-4252

"JUST DO IT! -- THIS IS YOUR WEB BLOG -- I DID MY PART -- NOW IT'S YOUR TURN

YOUR COMMENT NEEDED BELOW!

Remember: Seller: Flat Fee Listing - Why pay more?
Buyer: Get 50% Cashback!

Post a Comment

Leave a Reply

Your email address will not be published. Required fields are marked *


*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

rebatereps.ca